What the rich do with their astonishing freedom from taxes

Republicans say the rest of us can't afford for the rich to pay higher taxes, because that would ruin the economy for everyone (i.e., the rich create all the jobs, etc., etc.)

But for some reason, when we raised taxes through the roof in the past on the majority of the rich-- up to a mind-boggling 94% of income-- suddenly America boomed like never before, and rocketed from the bottom of the heap to become the greatest superpower the world had ever seen (plus displayed the fastest rising ever standard of living for us average folks, too)7.

Kinda makes you wonder what would happen if we did that again, doesn't it?

We're doing the exact opposite of that in 2008, with many wealthy individuals and corporations not only paying ZERO income taxes, but actually having taxpayer money from all we non-rich funneled directly into their pockets via government agency, plus laws regularly rewritten by Congress to make previously outlawed activities such as loan shark style interest rates, canceling retiree pensions and health plans, and poisoning of customers and employees all legal business practices by which to further grow their fortunes (at the expense of everyone else).

Today's rich can have so much money they literally pace upon gold floors-- wearing blue jeans with gold-lined pockets, and diamond-encrusted underwear-- trying to figure out how to spend it faster (references provided below).

This is a draft. Please contact me with any factual errors or inaccuracies found, so that I may address them. Thank you.

The flip-side to the results of that 94% tax on the rich in the old days has been the series of tax cuts for the rich, enacted since Reagan's time. To where today none of the rich must pay more than 18%-- and most pay nowhere near that. Heck: some pay no taxes whatsoever. As might be expected from the blockbuster consequences of raising their taxes all those decades back, all these dramatic cuts for the rich have apparently resulted in a downward spiral for America in general, ever since8.

But let us take a moment to examine just how tough the rich have it these days, before we go around demanding their taxes be raised.

The rich have bigger bills than the rest of us-- if that's how they like it

Republican pundits are basically correct when they say the rich usually have bigger bills than the rest of us-- DUH! But they leave out the fact that many of those larger bills for the rich are purely voluntary in nature. For 99% of the rich could live just as modestly as the rest of us in most ways, if they wanted to. And some do (I believe Warren Buffet lives in a house not much different from average income folks, for instance).

But there's more to the 'bigger bills' story.

Absolutely bigger, versus relatively bigger

There's an important difference between absolutely bigger bills, and relatively bigger bills. For instance, a rich kid with $1,000 who's charged 20% for something will still have $800 left over, while a poor kid with $100 in the same plight will have only $80.

In absolute terms the rich kid paid ten times more than the poor kid for the same thing (isn't that terribly immoral and wrong? Dick Cheney might ask). But he remains ten times better off than the poor kid afterwards because of the relative differences in initial money stash, AND the normal costs of living. I.e., if a single meal costs $10, then the rich kid will be able to eat eighty more times (27 days-- nearly a month) after paying the 20%, but the poor kid only eight (less than three days).

The example given above also illustrates the real world difference between adults who are rich, and those who are not. Or at least it does between the poorest rich, and the non-rich.

The differences get much bigger when you check out those wealthy folks who sit happily in the still-higher tiers of rich society: the plain rich and the super-rich. In those cases the differences between rich and non-rich get so huge that-- at the widest income gap-- you'd have to change the example above so that the rich kid has $437,500. Or at least 4,375 times whatever the poor average kid has. So in that case the average kid would still begin to starve after three days. But the rich kid would happily continue munching away for another 11,664 days (rounded off); or 32 years ($437,500 minus 20% leaves $350,000; subtract $90 for nine meals; divide the result by $10 a meal to get 34,991 meals; divide that by three for each day).

Three days versus 32 years. That's the difference between average folks and the least wealthy among the super-rich, in simple sustenance terms.

The wealthy have lots more wiggle-room price-wise than the rest of us, at both the top and bottom

But of course the rich can always simply choose to spend more than they have to on things like homes, cars, clothes, and the like. And even buy things poor folks might never even dream of. Things like those are what really ramp up the bills for the rich. Not taxes. No, in terms of taxes the rich haven't had it this good since maybe around 1900, or the era of the Robber Barons.

Here's an example: where average folk might buy a burger and fries for themselves and friends for $20 or so-- or stretch their food budget further by buying groceries and preparing their own meals-- the rich can and do at times spend enough on a single dining experience to match what the rest of us might spend for an entire year's (or decade's!) wardrobe1.

The money in all the monthly payments the rest of us make to own a car is easily spent by the rich on wine or watches alone2

Someone rich might could buy our whole hometown (or at least our neighborhood) for what they might otherwise spend on a single high end vehicle3

The rich could often buy the corporation which owns the company we work for in place of their latest vacation mansion acquisition4

But of course this crowd doesn't really need a home. They can afford to live their entire lives in the penthouses of upscale hotels around the world instead10.

The rich can have so much money they literally pace upon gold floors, wearing diamond-encrusted underwear and jeans with gold-lined pockets, trying to figure out how to spend it faster5

Amazingly enough, even spending of the scale already described isn't enough to put a dent into some fortunes. So those wealthy have to get creative to make a noticeable decline in their bank accounts. Seek out downright obscene ways to splurge. And that's where the cream of the crop of commercial services for the ultra-rich come in.

Beware the rich who DON'T get their kicks partying at world resorts, or buying yachts.

Not all the rich get their kicks the same way. Lots of them party their lives away like the young Paris Hilton, sure. Others go for the gold leaf floors, or collecting the world's most famous cars or mansions like a poor person might collect bottle caps or rubber bands.

But some get their kicks in other ways. Like fancying themselves the puppet masters of the entire human race. Manipulating elections, rewriting laws, rigging markets. Stuff like that. Not because they have to: they already have more money than they could ever spend. No: they do such things because they enjoy it. Because for them, wealth is not enough. They want to experience power. The power to affect the lives of millions upon a whim.

And those types of fantasies are usually of the sort the rest of us would rather not participate in. Unfortunately, all too often, we don't get a choice in the matter6.

The bottom line: Many Republicans will see all the above as excellent reasons why the rich should continue to get preferential treatment on taxes (seriously!). But of course they'll take pains to explain their point of view differently on TV newscasts and in debates.

As for me, I don't get it. I mean, it appears the rich need some help unloading all that cash9. And if we don't help them by taxing them more, they'll just go and blow it on having their floors and toilet seats sculpted from solid gold, or embedding diamonds in their underwear. Right?

I mean, what makes more sense? Some rich dude blowing a million dollars on a watch, or that million instead going to pay for universal healthcare, or children's education, or supplying our soldiers in the field? All of that arguably helps the rich a lot more than the fancy watch, by keeping a lid on contagious diseases, creating better quality workers, protecting against military threats, and speeding economic recovery after disasters.

"This Hood ornament is worth $200,000, which is enough money to buy ten Honda Accords. The hood ornament itself is made up of platinum and other special metals and then the diamonds are literally paved onto the ornament’s body to make it one of the most expensive car surface ever created."

"For a mere $138 million, you can own a cozy 103-room English country home, with a panic room, marble driveways and helipads -- a property that tops the 2007 Forbes annual list of the world's priciest homes for sale.

Updown Court in Windlesham, Surrey, has 58 acres of gardens and woodlands, five pools, 22 marble bathrooms and more than 50,000 square feet of living space, according to the list posted on Forbes.com, which did not say who the seller was.

"The 27-storey skyscraper being built in Mumbai by Mukesh Ambani, the richest person in India, could be the world's largest and costliest home with a price- tag nearing two billion dollar, according to Forbes magazine."

"When the Ambani residence is finished in January, completing a four-year process, it will be 550 feet high with 4,00,000 square feet of interior space,"

"The only remotely comparable high-rise property currently on the market is the 70 million dollar triplex penthouse at the Pierre Hotel in New York, designed to resemble a French chateau, and climbing 525 feet in the air,"

"Spending $80 million for a boat that goes underwater in a market where one that doesn't costs $150 million is a deal," Jones says. "Our Phoenix 1000 is four stories tall, a 65-meter-long blend of a tourist and military sub."

24 carat gold leaf flooring for their yachts...million dollar watches....$200,000 pairs of jeans (decorated with diamonds and the pockets literally gold-lined) comprise some of the perks the wealthiest of the wealthy might partake in.

"...the super-rich typically do not give away their entire fortunes, or even a big share."

"...the super-rich can’t be accumulating the money with the intention of spending it, either, because no one could spend that much."

"He spent something like $100 million on his Japanese-style mansion in Woodside, Calif., making it among the more expensive private residences ever built. But that is only about three weeks worth of the interest he earns on his wealth. And a house doesn’t actually spend down his net worth because it is an asset that can be resold. At least part of the $100 million is just a different way of saving."

"The last of the seemingly rational explanations is that the billionaires want to pass it on to their children. But, again, their fortunes are growing far faster than their number of heirs, so each of the children will have the same problems spending the money that their parents had."

"In a few weeks, you will see the list of the world’s wealthiest people and how vastly their wealth has increased. Warren Buffett will probably be the only one pledging to give his fortune away. The other billionaires will probably think he’s crazy, but it may make him the most rational person on the list."

"He is the proud owner of a Gulfstream IV, which he jokingly named "The Indefensible" after having once mocked corporate jet ownership. These planes, which can accommodate as many as 16 passengers, usually sell for about $16 million and up..."

"Those wishing to emulate Allen might seek out Monaco-based Wally Yachts. This outfitter will provide you with your own 279-foot vessel, complete with a gym, home theater and smaller sailing vessels. Price tag? Prepare to part with upward of $80 million."

Private islands go for only tens of millions of dollars...

"...only 64 street versions of the McLaren F1 supercar, produced from 1994 to 1998, have been built, and they sell anywhere from $1.3 million to $1.7 million. At last count, there were nine in the U.S.--and billionaire Ralph Lauren has two of them."

"Launched in 1990, the Lady Moura is 344 feet long and said to have cost a whopping $200 million."

"This yacht is so pimped-out; it even has its own private beach resort, which slides out from the side of the yacht right over the water and comes complete with sand, palm trees and deck chairs."

"Tatoosh has some pretty big toys onboard, including not one but two helicopters, a 40-foot custom Hinckley powerboat and a 40-foot Hinckley sailboat."

"At an amazing length of 414 feet, Octopus has two helicopters on the top deck (one in the front, one in the back), a 63-foot tender, a pool on one of the upper decks and hatches that serve as docks for jet skis.

Perhaps the most pimpin’ features of this yacht are its two submarines—one is a ten-person submarine that can sleep eight people for up to two weeks underwater, while the other is remote-controlled and used to study the ocean floor."

"At a length of 377 feet, 3 inches, Pelorus is the 11th largest yacht in the world. Constructed by Lürssen, Pelorus was launched in 2003, costing an amazing $300 million to build."

"On top of the $300 million price tag, it costs a whopping $12 million per year just to run Pelorus."

"Abramovich pimped-out Pelorus with features like bulletproof glass, a missile detection system, two helicopters and its own submarine.

Pelorus is even equipped with special lights designed to ward off those pesky paparazzi."

"Co-owned by Larry Ellison, CEO of Oracle Corporation, and David Geffen of Geffen Records, Rising Sun carried a price tag of $200 million.

Built with the intention of surpassing Octopus in size, 453 feet long Rising Sun was built by Lürssen in Germany. Not only did Rising Sun surpass Octopus, the yacht is so big that it can’t even dock at most marinas—it exceeds their size limits."

"The Republican tax cut cult...has achieved its zenith in California. Here, if you must have a yacht or private jet, you can have it tax-free. All you have to do is keep it out of the state for ninety days from the time of purchase and you pay no sales or use tax."

"My Lonesome Cowboy", a life size anime statue by Takashi Murakami, was bought at auction for $15 million. It's basically a naked young man pleasuring himself and expelling a long, thick, and curving stream of ejaculate.

"...the repeated series of huge tax cuts for the wealthy by the Herbert Hoover administration brought us the Great Depression, while raising taxes to provide for an active and interventionist government to protect the rights of labor to organize throughout the 1930s, 1940s, and 1950s led us to the Golden Age of the American Middle Class. (The top tax rate in 1930 under Hoover was 25 percent, and even that was only paid by about a fifth of wealthy Americans. Thirty years later, the top tax rate was 91 percent, and held at 70 percent until Reagan began dismantling the middle class. As the top rate dropped, so did the middle class it helped create.)"

"By mid- 1955...gross national product was growing at a rate of 7.6 percent. The boom was so great that the budget for 1956 predicted a surplus of $4.1 billion. With the surges in production and the economy, the 1950s is often recognized as the decade that eliminated poverty for the great majority of Americans. Over the decade, GNP per capita almost doubled and the public welfare reacted accordingly as the cost of living index rose by just 1 percent and unemployment dropped to 4.1 percent'"

"Income inequality in postwar America can be divided into two distinct periods. Between 1947 and 1974, income inequality was reduced from .376 to .355 on the Gini scale (which goes from 0 to 1, with 1 being the most unequal). But between 1975 and 1994, income inequality dramatically grew, from .357 to .426, a level not seen since the Great Depression. Although the decades immediately following World War II were socially conservative, they were impeccably liberal from an economic standpoint. In the 1950s, the top individual tax rate was 91 percent. By the 60s, President Johnson would cut poverty nearly in half with his Great Society programs. And this was an era of unprecedented prosperity; white middle class families never had it so good, either before or since. Black families made enormous strides towards equality, with their poverty rate falling from 55 to 31 percent..."

"In the tax years 1996 through 2000 - some of the best years for corporate profits the United States has ever seen - 63 percent of U.S.-based corporations paid no corporate income tax at all, the General Accounting Office reported.

Of those that did pay, 94 percent paid at a tax rate of less than 5 percent."

"...even among large ones - those with sales of more than $50 million or assets of at least $250 million - a third to 45 percent paid zero in the years 1996 to 2000.

"In a new sign of increasing inequality in the U.S., the richest 1% of Americans in 2006 garnered the highest share of the nation's adjusted gross income for two decades, and possibly the highest since 1929, according to Internal Revenue Service data.

Meanwhile, the average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years."

"New IRS statistics show 7,389 federal tax returns with $200,000 or more in adjusted gross income reported no federal income taxes in 2005. That's a 161% jump from the 2,833 comparable returns filed in 2004.

"By 2005, with huge trade and budget deficits, a disappearing auto industry, the most costly and disastrous war since the mid 19th century, a growing gap between rich and poor, a constantly projected inability to care for our ill or elderly and a pessimism repeatedly confirmed in polls..."

"...in the period that corporate culture has been in ascendance - roughly since the Reagan years - wages of lower income workers have declined, the ratio of executive to worker pay has soared, the real value of the minimum wage has fallen by almost a third, total hours worked has increased, percent of jobs with pensions has dropped, our balance of payments has become increasingly negative, the top 1% is back to getting 21% of all income and the age at which one receives Social Security has increased."

"...This liberal economic era came to an end in 1975, when a quiet revolution took over Washington D.C. The stage was set in 1974, when the House of Representatives decentralized its power, allowing 22 committees to delegate much of their authority to 172 subcommittees. This not only created a mass of competing special interests, but enabled corporations to lobby their particular subcommittees much more directly, secretly and effectively. But the real shift in power came with the 1975 SUN-PAC decision, which basically legalized corporate political action committees. In 1974, there were only 89 quasi-corporate PACs; a decade later, this had exploded to 1,682. By 1992, corporations formed 67 percent of all PACs, and they donated 79 percent of all contributions to political parties.

The rise of the corporate special interest system in 1975 resulted in a tremendous shift in power, away from workers and the poor, and towards corporations and the rich. Corporate lobbyists wasted no time scaling back the programs of the New Deal and the Great Society."

"Under the corporate special interest system, the top tax rates were reduced from 70 percent to as low as 28 percent, while regressive payroll, state and local taxes were raised on the poor. Executive pay exploded, while the average hourly wage fell from $8.55 to $7.40 in constant 82 dollars."

Higher taxes and laws restricting the ability of the rich to control unduly large portions of industry, government, and media comprise the bare minimum which must be done to protect them-- and us.

Some of the rich DO eventually succeed at impoverishing themselves, or letting their vast fortunes slip through their fingers. After that happens, they can need things like free or low cost educational and training opportunities, food stamps, social security, medicare, welfare, and disaster aid just as badly as everyone else. And so whatever taxes they paid earlier to keep such social safety nets going will be a Godsend to them.

"While unwilling to discuss his wealth, he said he could be a lot richer if he wanted to. "We know these guys in Google and the eBay guys," he said, "and they are not any happier than anyone else. A lot of money is a burden."

"After making his billions, Mr. Berggruen, 46, lost interest in acquiring things: They didn’t satisfy him, and in fact had become something of a burden. So he started paring down his material life, selling off his condo in New York, his mansion in Florida and his only car. He hatched plans to leave his fortune to charity and his art collection to a new museum in Berlin.

"Nobel Prize-winning behavioral economist Daniel Kahneman has found, however, that being wealthy is often a powerful predictor that people spend less time doing pleasurable things, and more time doing compulsory things and feeling stressed."

"Count Gottfried von Bismarck, who died on July 2, 2007, aged 44, was a louche German aristocrat with a multi-faceted history as a pleasure-seeking heroin addict, hell-raising alcoholic, flamboyant waster and a reckless and extravagant host of homosexual orgies."

"...the young von Bismarck showed early promise as a brilliant scholar, but led an exotic life of gilded aimlessness that attracted the attention of the gossip columns from the moment he arrived in Oxford in 1983..."

-- Elite Families Behind 'Death Tax' Campaign
by Megan Tady
Eighteen wealthy dynasties are part of a deceptive effort that targets ordinary Americans, urging them to help repeal a tax placed on a small number of extraordinary bequests. May 2, 2006

Either excessive wealth or poverty can lead to a greater tendency towards mental illness related suicide...but the wealthy person is a bit more likely to commit suicide than the poor one, under these conditions. So it would appear an increased redistribution of wealth from rich to poor would actually help reduce suicide rates among both groups.

"There are no two ways about it: having money protects you because, even when it comes to bad habits, the rich get better treatment. Scoring? Easy. My drug dealer had a round-the-clock service straight to your door. Like all the smartest things, you could only procure his services by introduction. He also had good-quality drugs, cut with fewer chemicals. I had no waiting on cold corners, no pleading or cajoling, no risk of being ripped off or beaten up."

"This is a vicious circle that drug users with resources have the luxury of avoiding. They may even be able to avoid admitting they are an addict, for a while. As one former addict told me, she had a mantra: "I am not an addict because I am not on the street, I am not selling my body, my car is taxed, I am paying my mortgage."

If you have money, there are none of the acid tests that expose the depth of your problem. You are never forced to find out how far you will go to fund your addiction. Rich drug addicts can replace what they lose or smash – friendships, marriages, china. But there is a downside. Being rich also means the consequences of "using" are muffled: children won't be taken into care; you won't lose your home; and there are few well-off addicts in prison. If you have endless money, it is more difficult to hit rock bottom. The addiction will probably kill you first."

"Why is fantasy the ultimate engine of human endeavor? Because of its ubiquitous availability, zero cost, enormous power to relieve stress and suffering, aid healing, boost health and creativity, fuel love, and generally motivate us to continue to plug away at our problems-- despite the often overwhelming odds against us.

But-- like most other things in life-- there can be a dark side as well. Fortunately, most of our personal fantasies rarely exert much tangible negative effect on others: for we simply don't have that much power or influence.

However, our top leaders (and the most wealthy among us) are different: their darkest fantasies could well be brought to life, and truly turn our world into a nightmare worse than any horror film imaginable.

For that reason, humanity has no choice but to collectively impose strenuous limits on the power of our leaders and the rich to bring their own worst fantasies to reality. For without such limits, the clock on human extinction merely ticks closer to our doom with each passing moment.

For fantasies are what drive us. Virtually all of us would make at least some of our fantasies come true, if it were in our power. Today, our leaders and the super-rich actually possess such power. In a worst case scenario, it would require only one such person to end the world as we know it, and bring about a fate perhaps worse than death for the rest of us. "